Understanding the Difference Between Equitable and Legal Title Under US Law

When it comes to owning property, there are two types of title: legal and equitable. Legal title refers to the legal right to control a property in accordance with the law, while equitable title gives a person the right to enjoy the benefits of owning a property even if they are not the legal owner. Legal title focuses on the duties of the owner, while equitable title is all about enjoying the property. Equitable ownership is not considered “real property”, meaning that a person with an equitable title cannot argue that they are the legal owner or possessor of the property in court. However, they do have more consistent control over the property than someone with just a legal title.

Equitable title is related to legal title in that it embodies the beneficial use of property associated with legal title, but does not include it. A person with an equitable title can make profits based on any improvements made or increase in value of the property, as long as the trustee legally maintains it. They also have rights of possession, alienability, and can transfer ownership to whomever they choose. On the other hand, someone with a legal title has the right to transfer ownership of the property to another party. A discrete title action is a special type of lawsuit that a landlord files to eliminate, establish, and “void” any other claim on the same property filed by other people. Equitable title grants the right to access property and, more importantly, the right to acquire formal legal title to the land. It is possible for one person to have equitable title to a property in which they have invested, while another person has legal title to that same property.

In this case, the law creates a kind of legal fiction, assigning beneficial use of property to the “equitable owner” and legal power over the property to the “legal owner”. For example, a purchaser of real estate in California under a land sale contract is considered an “equitable owner”.If a property owner wants to transfer their property to beneficiaries through a trust, they can transfer legal title to a trustee. Under real estate law, equitable title refers to a person's right to obtain full ownership of a property or an interest in it. This includes rights such as selling and transferring ownership.